The 50-point increase was expected, but the largest since February 2000.
At the same time, the interest rate forecast is sharply raised for the next few quarters. The Riksbank’s forecast is that the policy rate will be raised further and close to 2 per cent at the beginning of next year. With the banks’ addition, this means a variable interest rate of approximately 3.5 percent.
At the end of 2014, the Riksbank lowered the key interest rate to 0 percent. Since then, interest rates have been historically low, until last spring when it became a plus interest rate again to curb rising inflation.
No zero interest in sight
At present, the Riksbank’s Governor Stefan Ingves does not see interest rates creeping down to zero again.
– We must remember that zero interest rates, even negative interest rates in a long time perspective is very unusual, so under some kind of normal conditions we can probably count on slightly higher interest rates, he says in Aktuellt.
According to Ingves, if interest rates are to fall sharply, some form of recession with rising unemployment and bad times is required.
Higher inflation to expect
The purpose of interest rate increases is to raw inflation, which is now above seven percent. That to compare with the Riksbank’s two percent target.
If all goes well, inflation will be back at two percent in 2024, according to Stefan Ingves. But prices will continue to rise next year as well.
– It will be the case that this autumn and during the next six months, inflation will be even higher than what we see now. Then it starts to fall after that, a bit towards next year, says Stefan Ingves.